Plaintiff Objects to Silicon Valley Anti-Poaching Settlement - In House
In House - The FindLaw Corporate Counsel Blog

Plaintiff Objects to Silicon Valley Anti-Poaching Settlement

One week, rumors are flying about a settlement in the billions range, and as we noted, it wasn't a far-fetched argument either.

For years, Apple, Intel, Google, and Adobe agreed not to poach each others' talent, an anticompetitive practice that almost certainly depressed salaries. The evidence was strong as well, with smoking gun emails sent by Steve Jobs and others now on public display.

Instead, a proposed settlement was reached for millions, which sounds like a lot, until you consider the less-than-$5,000 per head payout and the years of artificially depressed salaries. Our reaction to the proposed settlement was, "Is that all?"

We weren't alone.

Objecting Plaintiff

Michael Devine, a class representative in the lawsuit, wrote a letter to the court asking Judge Lucy Koh to give the plaintiffs their day in court, calling the settlement "unfair and unjust."

Devine makes a number of interesting points in his letter to support his seemingly obvious assertion that the proposed settlement is inadequate. He notes that when Facebook refused to join the "no poaching" pact, Google raised its salaries by ten percent to keep employees from defecting. This settlement, of around $5,000 per head, amounts to less than one percent of the estimated compensation of individual class members.

He also bemoaned the lack of punishment or deterrence, noting:

As an analogy, if a shoplifter is caught on video stealing a $400 iPad from the Apple Store, would a fair and just resolution be for the shoplifter to pay Apple $40, keep the iPad, and walk away with no record or admission of wrongdoing? Of course not, nor is such a resolution appropriate in our case.

Both Devine, and a second affected employee (who spoke anonymously to Ars Technica) noted that the settlement helps the plaintiffs' attorneys, and the defendants, but not the affected workers.

Is There Any Way This Settlement is Fair?

Devine, and everyone else with a pulse, noted the lack of a punishment factor for companies with hundreds of billions of dollars in cash on hand. We all noticed that the per-head figure was a pittance compared to a typical engineer's salary in the Valley.

But, is there a justification for such a small amount? Besides the fact that class action settlements are pretty much always significantly lower than a potential payout from trial, and lower than the plaintiffs' actual damages (otherwise, there'd be no incentive to settle), there is still the Dukes factor that we noted before.

The initial class of 100,000 plus was already withered down by the still-developing Dukes commonality standard. It's uncertain whether a mixed class of engineers, programmers, and other technical professionals from four different companies could have survived as a mega-class on appeal. It's a weak justification for pennies on the dollar, but it is a consideration nonetheless.

Legit settlement or load of crap? Tweet your thoughts @FindLawLP.

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